Dupont Dow v. NLRB

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

(/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

'83217 '2: (/$6720(56 ; //&  3HWLWLRQHU&URVV5HVSRQGHQW   1RV   Y !   1$7,21$/ /$%25  5(/$7,216 %2$5'  5HVSRQGHQW&URVV3HWLWLRQHU    &+(0,&$/ :25.(56  $662&,$7,21 ,1&  ,QWHUYHQRU   1 2Q3HWLWLRQIRU5HYLHZDQG&URVV$SSOLFDWLRQ IRU(QIRUFHPHQWRIDQ2UGHURIWKH 1DWLRQDO/DERU5HODWLRQV%RDUG 1RV&$ $UJXHG$SULO 'HFLGHGDQG)LOHGsXO\

  'XSRQW'RZ 1RV (ODVWRPHUVY1/5%

%HIRUH68+5+(,15,&+DQG*,/0$1&LUFXLWsXGJHV +22''LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8('%DUU\0:LOORXJKE\<281*&21$:$< 67$5*$77  7$

7KH +RQRUDEOH sRVHSK 0 +RRG 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5%

2QDSSHDO''(GLVSXWHVWKH%RDUGjVILQGLQJWKDWLWLVD SHUIHFWO\ FOHDU VXFFHVVRUl DQG ZDV WKHUHIRUH UHTXLUHG WR EDUJDLQZLWKWKH8QLRQVSULRUWRHVWDEOLVKLQJWKHLQLWLDOWHUPV DQGFRQGLWLRQVRIHPSOR\PHQWIRULWVZRUNIRUFH6HH1/5% Y%XUQV,QWjO6HF6HUY,QF86)RUWKH IROORZLQJUHDVRQVZHDIILUPWKH1/5% VGHWHUPLQDWLRQWKDW ''(LVDSHUIHFWO\FOHDUVXFFHVVRUDQGWKDW''(YLRODWHGWKH $FW E\ QRW EDUJDLQLQJ ZLWK WKH 8QLRQV SULRU WR IL[LQJ WKH LQLWLDOWHUPVDQGFRQGLWLRQVRIHPSOR\PHQW ,%$&.*5281' ''(LVDMRLQWYHQWXUHEHWZHHQ'RZ&KHPLFDO&RPSDQ\ 'RZ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 SURGXFWLRQ DQG PDLQWHQDQFH HPSOR\HHV DQG  FOHULFDO HPSOR\HHV DW 'X3RQW V&KDPEHUV:RUNVSODQWLQ1HZsHUVH\&:$DQG 'X3RQW VODVWFRQWUDFWZDVHIIHFWLYHIURPsXO\XQWLO WHUPLQDWHGE\HLWKHUSDUW\ 2Q sDQXDU\   ZKLOH ERWK ODERU FRQWUDFWV ZHUH HIIHFWLYH'X3RQWLQIRUPHGWKH8QLRQVWKDWLWKDGVLJQHGD OHWWHURILQWHQWWRIRUPDMRLQWYHQWXUHZLWK'RZFDOOHG''( WRSURGXFHDQG VHOO HODVWRPHUSURGXFWV'X3RQWDJUHHGWR FRQWULEXWH LWV HODVWRPHU SURGXFW OLQH DQG LWV DVVHWV DQG HTXLSPHQWWR''(DQG'RZDJUHHGWRFRQWULEXWHLWVSDWHQWHG ,QVLWHSURGXFWWHFKQRORJ\WRWKHMRLQWYHQWXUH  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

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7KHIRUPDWLRQDJUHHPHQWIXUWKHUSURYLGHG WKDW'X3RQWDQG'RZZRXOGmXVHWKHLUEHVWHIIRUWVWRFDXVH VXFK(ODVWRPHU(PSOR\HHVWRDFFHSWVXFKHPSOR\PHQWlDQG ZRXOGRIIHUWKHPFRPSHQVDWLRQDQGEHQHILWVVXEVWDQWLDOO\ HTXLYDOHQWWRWKHLUFXUUHQWFRPSHQVDWLRQSODQV$WDPHHWLQJ LQsDQXDU\'RQs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%XWWKHZDLYHUPXVW 2Q1RYHPEHU''(jVGHVLJQDWHG3UHVLGHQWDQG EHFOHDUDQGXQPLVWDNDEOH0HWUR(GLVRQ&RY1/5% &(2 'RQDOG 'XQFDQ LVVXHG D PHPRUDQGXP WR HODVWRPHU 867KXVDQHPSOR\HUPXVWVKRZWKDWWKH HPSOR\HHVDW'X3RQWDQG'RZZRUOGZLGHVWDWLQJWKDW''( XQLRQUHFHLYHGFOHDUDQGXQHTXLYRFDOQRWLFHRIDSURSRVHG ZRXOG DQQRXQFH LWV JHQHUDO SROLF\ RQ FRPSHQVDWLRQ DQG FKDQJHDQGWKDWWKHXQLRQFRQVFLRXVO\UHOLQTXLVKHGLWVULJKWWR EHQHILWV E\ 1RYHPEHU  ZLWK GHWDLOV WR IROORZ LQ EDUJDLQ*UDWLRW&PW\+RVSY1/5%)G 'HFHPEHU mOHDGLQJ XS WR WKH sDQXDU\   GHOLYHU\ RI WK&LU<+$,QFY1/5%)GWK&LU LQGLYLGXDOMRERIIHUVZKLFKZLOOLQFOXGHIXOOGHWDLOVIRUHDFK  SHUVRQl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m>L@WLVWKHLQWHQWRI'X3RQWDQG'X3RQW'RZ HPSOR\PHQW''(QDUURZO\DQVZHUHGWKDWLWZDVQRWWKHDOWHU (ODVWRPHUV WR PLQLPL]H WXUQRYHU DQG DVVRFLDWHG WUDLQLQJl HJRRI'X3RQWDQGVLPSO\SURFHHGHGWRVHWWKHLQLWLDOWHUPV 'LVDELOLW\ EHQHILWV WKH VDYLQJV DQG LQYHVWPHQW SODQ DQG DQGFRQGLWLRQVRIHPSOR\PHQW ZLWKRXWEDUJDLQLQJ''( V YDFDWLRQSODQZHUHWRUHPDLQWKHVDPH2WKHUEHQHILWVVXFK FRQGXFW LQGLFDWHG WKDW LW ZRXOG QRW EDUJDLQ WKH WHUPV DQG DV WKH OLIHORQJ OHDUQLQJ WXLWLRQ UHIXQG KROLGD\V DQG KRPH FRQGLWLRQV RI HPSOR\PHQW ZLWK WKH 8QLRQV  9LHZLQJ WKLV SXUFKDVHDVVLVWDQFHORDQVZHUHDOVRWRFRQWLQXHXQFKDQJHG  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

7KHPHPRIXUWKHUSURYLGHGWKDW HPSOR\PHQWFRQGLWLRQVZRXOGUHPDLQWKHVDPH0RUHRYHU WKH&RPSDQ\GLGQRWFKDQJHWKHWHUPVXQWLODIWHUPDQ\RIWKH 'X3RQW 'RZ (ODVWRPHUV PRVW OLNHO\ ZLOO EH D HPSOR\HHVKDGDFFHSWHGMRERIIHUVZLWK''( mVXFFHVVRUl RI WKH WZR SDUHQW FRPSDQLHV EHFDXVH LWV SODQV WR RIIHU MREV WR FXUUHQW 'X3RQW HPSOR\HHV WR 8QGHU''(jVUHDGLQJRI3HWHUVWKHHPSOR\HUFDQKDYHLW HVWDEOLVKLWVZRUNIRUFH ERWKZD\VLWFDQOXUHH[SHULHQFHGZRUNHUVLQWRDFFHSWLQJMRE RIIHUV E\ SURPLVLQJ WKH VDPH WHUPV DQG FRQGLWLRQV RI ,IWKHYHQWXUHKLULQJSURFHVVUHVXOWVLQPRUHWKDQ HPSOR\PHQW\HWFDQUHVHUYHLWVDELOLW\WRVHWWKHLQLWLDOWHUPV RIWKHQHHGHGZRUNIRUFHFRPLQJIURPDPRQJHPSOR\HHV DQGFRQGLWLRQVE\VLPSO\DQQRXQFLQJWKHFKDQJHVSRVWKLUH UHSUHVHQWHGE\WKH&KDPEHUV:RUNVXQLRQWKHYHQWXUH EXW mEHIRUH RU LPPHGLDWHO\ DIWHU FRPPHQFLQJ RSHUDWLRQVl ZLOOPHHWLWVREOLJDWLRQDQGUHFRJQL]HWKHXQLRQ 7KLVLQWHUSUHWDWLRQFDQQRWEHUHFRQFLOHGZLWKWKH%XUQVFDYHDW RURXUKROGLQJLQ6SLW]HU $VDOLNHO\mVXFFHVVRUFRPSDQ\lWKHYHQWXUHZLOOVHW WKHLQLWLDOWHUPVDQGFRQGLWLRQVRIHPSOR\PHQW:KHQ 7RWKHH[WHQWWKDWWKHVHFRQGFLUFXPVWDQFHDUWLFXODWHGLQ DSSURSULDWHWKHYHQWXUHZLOOKRQRUDQ\GXW\WREDUJDLQ 3HWHUV FRQIOLFWV ZLWK 6SLW]HU LW FDQQRW EH WKH ODZ RI WKLV &LUFXLW:KHQDODWHUGHFLVLRQRIWKLVFRXUWFRQIOLFWVZLWKWKH (PSKDVLV DGGHG  7KH PHPR DOVR LQWURGXFHG D m6XFFHVV KROGLQJRIDSULRUGHFLVLRQLWLVWKHHDUOLHUFDVHWKDWFRQWUROV 6KDULQJl SODQ ZKLFK SURYLGHG WKDW HYHU\ ''( HPSOR\HH 6DOPLY6HF \RI+HDOWK +XPDQ6HUYV)G ZRXOG UHFHLYH FRPSHQVDWLRQ HTXDO WR  RU RQH PRQWK WK&LUm$SDQHORIWKLV&RXUWFDQQRWRYHUUXOHWKH VDODU\LI''(UHDFKHGFHUWDLQJRDOV GHFLVLRQ RI DQRWKHU SDQHO  7KH SULRU GHFLVLRQ UHPDLQV FRQWUROOLQJDXWKRULW\XQOHVVDQLQFRQVLVWHQWGHFLVLRQRIWKH 'XULQJ WKH ZHHN RI sDQXDU\   ''( RIIHUHG 8QLWHG6WDWHV6XUSUHPH&RXUWUHTXLUHVPRGLILFDWLRQRIWKH HPSOR\PHQW GLUHFWO\ WR DOO 'X3RQW HODVWRPHUV HPSOR\HHV GHFLVLRQ RU WKLV &RXUW VLWWLQJ HQ EDQF RYHUUXOHV WKH SULRU ZRUNLQJ DW /RXLVYLOOH DQG &KDPEHUV :RUNV ZLWKRXW GHFLVLRQl VHH WK &LU 5 F VWDWLQJ WKDW SXEOLVKHG EDUJDLQLQJ ZLWK &:$ RU 1&8  ''( DGYLVHG 'X3RQW SDQHO RSLQLRQV DUH ELQGLQJ RQ DOO VXEVHTXHQW SDQHOV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sDQXDU\&:$ILOHGDQXQIDLUODERUSUDFWLFH FKDUJH DJDLQVW ''( 'X3RQW DQG 'RZ  2QH ZHHN ODWHU ''(DOVRFODLPVWKDWWKH1/5%LPSURSHUO\GHWHUPLQHGWKDW ''( DQQRXQFHG FKDQJHV WR WKH WHUPV DQG FRQGLWLRQV DW WKH8QLRQVGLGQRWZDLYHWKHLUULJKWWREDUJDLQRYHUWKHWHUPV &KDPEHUV:RUNV''(UHGXFHGWKHQXPEHURIPHFKDQLFDO DQGFRQGLWLRQVRIHPSOR\PHQW''(DUJXHVWKDWWKH8QLRQV VWRYHSLSH MRE FODVVLILFDWLRQV IURP VL[ WR WZR HOLPLQDWHG ZDLYHGWKHLUULJKWZKHQWKH\UHIXVHGWREDUJDLQEHFDXVHWKH\ RYHUWLPH SD\ IRU VFKHGXOHG RYHUWLPH QRW ZRUNHG DQG ZURQJO\EHOLHYHGWKDW''(ZDVWKHDOWHUHJRRI'X3RQWDQG  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

HPSOR\HHFDQQRWVHWWKHLQLWLDOWHUPVRIHPSOR\PHQWLImLWLV HQKDQFHGWKHVHYHUDQFHSURJUDP,WGLGQRWFKDQJHWKHWHUPV SHUIHFWO\ FOHDUl WKDW WKH FRPSDQ\ mLQWHQG>V@ WR UHKLUH D DQGFRQGLWLRQVDW/RXLVYLOOH$WWKHWLPH''(DQQRXQFHG VXIILFLHQW QXPEHU RI HPSOR\HHV WR PDLQWDLQ WKH 8QLRQjV WKHVHFKDQJHVSHUFHQWRIWKH&KDPEHUV:RUNVHPSOR\HHV PDMRULW\VWDWXVl6SLW]HU)GDW KDGDOUHDG\DFFHSWHGWKHXQFRQGLWLRQDORIIHUVRIHPSOR\PHQW ,Q3HWHUV6DPXHO3HWHUVDQQRXQFHGWKDWWKHFRQWUDFWZDV 2QsDQXDU\1&8ILOHGDQXQIDLUODERUFKDUJHRQ YRLG RQ WKH YHU\ VDPH GD\ KH ZDV DSSRLQWHG UHFHLYHU DQG EHKDOIRIWKHEDUJDLQLQJXQLWDWWKH/RXLVYLOOHIDFLOLW\7KH GXULQJ KLV LQLWLDO FRQWDFWV ZLWK WKH HPSOR\HHV  6RRQ DIWHU %RDUGFRQVROLGDWHGWKHFKDUJHV6XEVHTXHQWO\WKH*HQHUDO FRPPHQFLQJ RSHUDWLRQV DV UHFHLYHU  3HWHUV GHVFULEHG WKH &RXQVHOILOHGDFRPSODLQWDQGDPHQGHGFRPSODLQWDOOHJLQJ EHQHILWVSDFNDJHWKH\FRXOGH[SHFWLIKHSXUFKDVHG:HVWHUQjV WKDW''(DQG'X3RQWZHUHmDOWHUHJRFRPSDQLHVlRULQWKH DVVHWV7KXV3HWHUVjVVWDWHPHQWVLQGLFDWLQJKLVLQWHQWWRVHW DOWHUQDWLYH WKDW ''( ZDV D mSHUIHFWO\ FOHDU VXFFHVVRUl WR QHZ WHUPV SUHFHGHG KLV VWDWXV DV RZQHU  ,Q RWKHU ZRUGV 'X3RQWXQGHU%XUQV ZKLOH PDGH  mEHIRUH RU LPPHGLDWHO\ DIHU FRPPHQFLQJ RSHUDWLRQVl3HWHUVVWDWHPHQWVZHUHPDGHLQKLVFDSDFLW\DV 7KH $/s GLVPLVVHG WKH FKDUJHV ILQGLQJ WKDW ''( ZDV FRXUWDSSRLQWHGUHFHLYHUDQGQRWDVRZQHU QHLWKHUDQDOWHUHJRRI'X3RQWQRUDSHUIHFWO\FOHDUVXFFHVVRU 7KH $/sjV ILQGLQJ WKDW ''( ZDV QRW D SHUIHFWO\ FOHDU %\FRQWUDVW''(jVDQQRXQFHPHQWRILWVQHZWHUPVFDPH VXFFHVVRU ZDV EDVHG RQ ''(jV FRPPXQLFDWLRQ RQ ORQJ DIWHU LQLWLDO QHJRWLDWLRQV DQG IRUPDO RIIHUV RI 1RYHPEHU   WKDW LW LQWHQGHG WR HVWDEOLVK D VXFFHVV HPSOR\PHQWKDGEHHQPDGHDQGDIWHURIWKHZRUNIRUFH VKDULQJSODQ,QWKH$/sjVYLHZWKLVDQQRXQFHPHQWSXWWKH KDGDFFHSWHGWKHRIIHURQWKHEDVLVRIWKHRULJLQDOWHUPV7KDW HPSOR\HHV RQ QRWLFH WKDW WKH WHUPV DQG FRQGLWLRQV RI LV WKH &RPSDQ\ FOHDUO\ LQWHQGHG WR KLUH D PDMRULW\ RI WKH HPSOR\PHQWZRXOGEHGLIIHUHQWDW''( ZRUN IRUFH DQG OHG WKH HPSOR\HHV WR EHOLHYH WKDW WKHLU 7KH*HQHUDO&RXQVHO&:$DQG1&8ILOHGH[FHSWLRQVWR WKH$/sjVGHFLVLRQ7KH1/5%DIILUPHGWKH$/sjVILQGLQJ WKDW''(ZDVQRWDQDOWHUHJRRI'X3RQWEXWKHOGWKDW''( HPSOR\HHV EHFDXVH LW ZDV IHDUIXO WKDW LW ZRXOG QRW EH DEOH WR H[HUFLVH LWV ULJKW WR VHW LQLWLDO WHUPV RI HPSOR\PHQW mD ULJKW WR ZDVDSHUIHFWO\FOHDUVXFFHVVRUWR'X3RQW,WWKHUHIRUHKHOG ZKLFK WKH 6XSUHPH &RXUW DWWDFKHV JUHDW LPSRUWDQFH LQ :738l WKDW ''( YLRODWHG 6HFWLRQ D  DQG  RI WKH $FW  $57:.0 &5  :/  DW  86& † D  DQG  E\ IDLOLQJ WR UHFRJQL]H DQG ,G DW  EDUJDLQ ZLWK WKH 8QLRQV DQG E\ XQLODWHUDOO\ VHWWLQJ LQLWLDO :H WKHQ KHOG WKDW DQ HPSOR\HU PD\ VHW WKH LQLWLDO WHUPV RI WHUPVDQGFRQGLWLRQVRIHPSOR\PHQWZLWKRXWEDUJDLQLQJZLWK HPSOR\PHQW ZLWKRXW ILUVW FRQVXOWLQJ WKH EDUJDLQLQJ XQLW UHSUHVHQWDWLYHV LI LW KDV QRW E\ mWDFLW LQIHUHQFHl PLVOHG WKH HPSOR\HHV LQWR WKLQNLQJ WKDW WKH 8QLRQV  7KH 1/5% RUGHUHG ''( WR FHDVH DQG GHVLVW WKH SULRU ZRUNLQJ FRQGLWLRQV ZRXOG FRQWLQXH RU LI WKH HPSOR\HU KDV IURPWKHXQODZIXOFRQGXFWUHFRJQL]HDQGEDUJDLQZLWKWKH DIILUPDWLYHO\ DQQRXQFHG QHZ HPSOR\PHQW FRQGLWLRQV m EHIRUH RU 8QLRQV UHVFLQG WKH XQLODWHUDO FKDQJHV LI WKH 8QLRQV LPPHGLDWHO\ DIWHU FRPPHQFLQJ RSHUDWLRQVl ,G DW  HPSKDVLV DGGHG UHTXHVWHGPDNHHPSOR\HHVZKROHDQGSRVWDUHPHGLDOQRWLFH ,W LV GLIILFXOW WR VTXDUH WKH VHFRQG FLUFXPVWDQFH ZLWK WKH 6SUXFH 8S DQG 5($ ([SUHVV WHVWV ZH UHOLHG RQ LQ 3HWHUV 0RUHRYHU LW LV LQFRQVLVWHQW ,,',6&866,21 ZLWK RXU FRQFHUQ WKDW m>W@KH SURSHU WHVW VKRXOG DIIRUG D EDODQFH EHWZHHQ WKH LQWHUHVWV RI VXFFHVVRU HPSOR\HUV DQG EDUJDLQLQJ XQLWVl EHFDXVH LW WLSV WKH EDODQFH LQ IDYRU RI WKH QHZ HPSOR\HU DW WKH H[SHQVH RI WKH EDUJDLQLQJ ''(UDLVHVWZRLVVXHV)LUVW''(FODLPVWKDWLWLVQRWD XQLW 7KLV LV FRQWUDU\ WR WKH %XUQV H[FHSWLRQ DQG LUUHFRQFLODEOH ZLWK RXU SHUIHFWO\FOHDUVXFFHVVRUEHFDXVHLWDQQRXQFHGQHZWHUPVDQG GHFLVLRQ LQ 6SLW]HU FRQGLWLRQVRIHPSOR\PHQWEHIRUHLWEHJDQRSHUDWLRQVDQGGLG  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

QRW PLVOHDG LWV SURVSHFWLYH ZRUNIRUFH DV WR WKH WHUPV DQG WRGRVRUHVXOWVLQDWHVWWKDWLV LQFRQVLVWHQWZLWKRXUSULRU FRQGLWLRQVRIHPSOR\PHQW6HFRQG''(FODLPVWKDWHYHQLI KROGLQJ LQ 6SLW]HU  6SLW]HU FOHDUO\ VWDWHV WKDW D VXFFHVVRU LWLVDSHUIHFWO\FOHDUVXFFHVVRUWKH8QLRQVZDLYHGWKHLUULJKW WREDUJDLQZLWK''(E\LQVLVWLQJWKDW''(ZDVWKHDOWHU HJRRI'X3RQWDQGWKHODERUFRQWUDFWVZLWK'X3RQWZHUH  VWLOOHIIHFWLYH 3HWHUV IDLOV WR FLWH 6SLW]HU ,Q 6SLW]HU WKLV &RXUW QRWHG WKDW WKH 6HFRQG &LUFXLW LQ GHILQLQJ WKH SHUIHFWO\ FOHDU VXFFHVVRU H[FHSWLRQ UHOLHG $3HUIHFWO\&OHDU6XFFHVVRU RQ WKH 1/5%jV GHFLVLRQ LQ 6SUXFH 8S &RUS  1/5% 1R   7KH 6HFRQG &LUFXLW UHO\LQJ RQ WKH %RDUGjV GHFLVLRQ LQ 6SUXFH 8S &RUS  1/5% 1R   KDV FRQVLGHUHG ''( DUJXHV WKDW WKH 1/5% LPSURSHUO\ FRQFOXGHG WKDW WKH mSHUIHFWO\ FOHDUl H[FHSWLRQ ZKHUH WKH LQLWLDO WHUPV ZHUH ''(ZDVDSHUIHFWO\FOHDUVXFFHVVRUREOLJDWHGWREDUJDLQZLWK DQQRXQFHG SULRU WR RU VLPXOWDQHRXVO\ ZLWK WKH LQYLWDWLRQ WR WKH WKH8QLRQVEHIRUHVHWWLQJWKHLQLWLDOWHUPVDQGFRQGLWLRQVRI SUHGHFHVVRUjV HPSOR\HHV %URWKHUKRRG RI 5DLOZD\ Y 5($ HPSOR\PHQW EHFDXVH ''( DQQRXQFHG QHZ WHUPV DQG ([SUHVV ,QF  )G   G &LU  7KH FRXUW FRQGLWLRQVRIHPSOR\PHQWEHIRUHFRPPHQFLQJRSHUDWLRQVDQG OLPLWHG WKH H[FHSWLRQ WR ZKHUH WKH QHZ HPSOR\HU KDV HLWKHU DFWLYHO\ RU E\ WDFLW LQIHUHQFH GLGQRWPLVOHDGLWVZRUNIRUFH PLVOHG HPSOR\HHV LQWR EHOLHYLQJ WKH\ ZRXOG DOO EH UHWDLQHG ZLWKRXW FKDQJH LQ WKHLU ZDJHV KRXUV RU ZKHUH 7KLV FRXUW UHYLHZV IDFWXDO GHWHUPLQDWLRQV RI WKH 1/5% WKH QHZ HPSOR\HU XQOLNH WKH 5HVSRQGHQW KHUH KDV XQGHUDVXEVWDQWLDOHYLGHQFHVWDQGDUG86&†H IDLOHG WR FOHDUO\ DQQRXQFH LWV LQWHQW WR HVWDEOLVK D QHZ 6XEVWDQWLDO HYLGHQFH PHDQV VXFK UHOHYDQW HYLGHQFH DV D VHW RI FRQGLWLRQV SULRU WR LQYLWLQJ IRUPHU HPSOR\HHV WR

UHDVRQDEOH PLQG PLJKW DFFHSW DV DGHTXDWH WR VXSSRUW D DFFHSW HPSOR\PHQW 6SLW]HU  )G DW  TXRWLQJ 5($ ([SUHVV +RZHYHU ZH GLG QRW FRQFOXVLRQ1/5%Y3HQWUH(OHF,QF)G DW WKDW WLPH DFFHSW WKLV UHDGLQJ RI WKH %XUQV FDYHDW WK &LU   7KDW LV LI WKH UHFRUG YLHZHG DV D ZKROH :LWKRXW FRPPHQWLQJ RQ WKH DFFHSWDQFH RI WKLV OLPLWDWLRQ E\ WKLV SURYLGHVVXIILFLHQWHYLGHQFHIRUDUHDVRQDEOHIDFWILQGHUWR FRXUW ZH EHOLHYH WKH IDFWV LQ WKH LQVWDQW FDVH DUH VXIILFLHQW UHDFKWKHFRQFOXVLRQVWKH%RDUGKDVUHDFKHGWKHFRXUWZLOO QHYHUWKHOHVV WR HVWDEOLVK WKDW WKH HPSOR\HHV ZHUH PLVOHG E\ QRWGLVWXUEWKRVHILQGLQJV8QLYHUVDO&DPHUD&RUSY1/5% mWDFLW LQIHUHQFHl LQWR EHOLHYLQJ WKH\ ZRXOG EH UHWDLQHG ZLWKRXW

86&RQFOXVLRQVRIODZDUHVXEMHFWWR FKDQJH LQ WKH FRQGLWLRQV RI HPSOR\PHQW +HUH WKH HPSOR\HHV ZHUH WROG WKH &RPSDQ\ ZRXOG mFDUU\ RQ DV XVXDOl DGHQRYRUHYLHZDOWKRXJKWKHFRXUWZLOOXSKROGWKH%RDUG V ,G DW  UHDVRQDEOHLQWHUSUHWDWLRQRIWKH1/5$ZKHUH&RQJUHVVKDV ,Q 3HWHUV ZH GLVFXVVHG ERWK WKH 6SUXFH 8S DQG 5($ ([SUHVV WHVWV QRWVSRNHQWRWKHFRQWUDU\RQWKHVDPHLVVXH$XWRPDWLF IRU SHUIHFWO\ FOHDU VXFFHVVRU 3HWHUV  )G DW  :H WKHQ 6SULQNOHU&RUSRI$PHULFDY1/5%)GWK H[SODLQHG

&LU 7KH SURSHU WHVW VKRXOG DIIRUG D EDODQFH EHWZHHQ WKH LQWHUHVWV RI VXFFHVVRU HPSOR\HUV DQG EDUJDLQLQJ XQLWV 6LPSO\ KLULQJ WKH SUHGHFHVVRUjV XQLRQ HPSOR\HHV VKRXOG QRW 7KHREOLJDWLRQRIDQHZHPSOR\HUWRQHJRWLDWHWKHLQLWLDO DXWRPDWLFDOO\ WULJJHU D GXW\ WR EDUJDLQ 7KH VXFFHVVRU HPSOR\HU WHUPVDQGFRQGLWLRQVRIHPSOR\PHQWGHSHQGVRQZKHWKHUWKH VKRXOG EH JLYHQ DQ RSSRUWXQLW\ HLWKHU WR VHW WKH LQLWLDO WHUPV RI QHZHPSOR\HULVDQRUGLQDU\VXFFHVVRURUDmSHUIHFWO\FOHDU HPSOR\PHQW RU WR LQIRUP WKH HPSOR\HHV WKDW WKH FRQGLWLRQV RI VXFFHVVRUl,WLVDIXQGDPHQWDOWHQHWRIIHGHUDOODERUODZWKDW HPSOR\PHQW ZRXOG UHPDLQ LQ SODFH VXEMHFW WR EDUJDLQLQJ %\

DQHZHPSOR\HULVJHQHUDOO\IUHHWRVHWWKHLQLWLDOWHUPVRI HOLPLQDWLQJ WKH VXFFHVVRU HPSOR\HUjV RSSRUWXQLW\ WR VHW WKH LQLWLDO WHUPV RI HPSOR\PHQW VLPSO\ EHFDXVH LW FKRRVHV WR KLUH D HPSOR\PHQW IRU WKH HPSOR\HHV RI D SUHGHFHVVRU ZLWKRXW VXEVWDQWLDO FRPSOHPHQW RI LWV SUHGHFHVVRUjV HPSOR\HHV PD\ OHDG EDUJDLQLQJ ZLWK WKH LQFXPEHQW XQLRQ  %XUQV  86 DW WR GLUH FRQVHTXHQFHV IRU VXFK HPSOR\HHV )RU H[DPSOH D VXFFHVVRU HPSOR\HU PD\ FKRRVH QRW WR KLUH LWV SUHGHFHVVRUjV  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

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 RI3HWHUV VDFWLRQV$FFRUGLQJO\3HWHUVZDVIUHHWRVHW WKH LQLWLDO WHUPV RI HPSOR\PHQW DQG WKH %RDUG V 7KH 6XSUHPH &RXUW ILUVW DUWLFXODWHG WKH SHUIHFWO\ FOHDU FRQFOXVLRQWRWKHFRQWUDU\LVLQHUURU VXFFHVVRUGRFWULQHLQ%XUQVVXSUD 3HWHUV)GDW $OWKRXJKDVXFFHVVRUHPSOR\HULVRUGLQDULO\IUHHWRVHW LQLWLDO WHUPV RQ ZKLFK LW ZLOO KLUH WKH HPSOR\HHV RI D ,Q 3HWHUV WKLV &RXUW HPSKDVL]HG WKH mXQLTXH SUHGHFHVVRU WKHUH ZLOO EH LQVWDQFHV LQ ZKLFK LW LV FLUFXPVWDQFHVlVXUURXQGLQJ3HWHUVj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††DRIWKH$FW ,Q RWKHU ZRUGV XQOLNH 3HWHUV KHUH WKHUH LV VXEVWDQWLDO 86&††D HYLGHQFHWKDW''(GLUHFWO\DQGE\mWDFLWLQIHUHQFHlPLVOHG WKHXQLRQZRUNHUVDERXWLWVLQWHQWLRQV7KXVXQGHUWKHILUVW %XUQV86DWGLFWD7KH&RXUWGLGQRWSURYLGH FLUFXPVWDQFH DUWLFXODWHG LQ 3HWHUV ''( ZRXOG QRW EH DQ\JXLGDQFHDVWRWKHVFRSHRIWKLVH[FHSWLRQKRZHYHU DOORZHGWRXQLODWHUDOO\VHWWKHLQLWLDOWHUPVRIHPSOR\PHQW 6KRUWO\DIWHU%XUQVZDVLVVXHGZHDSSOLHGWKH%XUQVFDYHDW %XW ''( KDQJV LW KDW RQ WKH VHFRQG FLUFXPVWDQFH LQ6SLW]HU$NURQ,QFY1/5%)GWK&LU DUWLFXODWHGLQ3HWHUV''(FODLPVWKDWEHFDXVHLWDQQRXQFHG :HKHOGWKDW D FKDQJH LQ ZRUNLQJ FRQGLWLRQV EHIRUH FRPPHQFLQJ RSHUDWLRQVRQ$SULOXQGHU3HWHUVLWZDVHQWLWOHGWR 8QGHU%XUQVWKHVXFFHVVRUHPSOR\HUFDQVHWWKHLQLWLDO XQLODWHUDOO\VHWWKHLQLWLDOHPSOR\PHQWWHUPV7DNHQRXWRI WHUPVXSRQZKLFKUHKLULQJLVFRQGLWLRQDOSURYLGHGWKDW FRQWH[W''(jVDUJXPHQWDSSHDUVOHJLWLPDWHVLQFHLWGLGLQ WDNHVSODFHEHIRUHWKHGXW\WREDUJDLQDULVHV*HQHUDOO\ IDFWDQQRXQFHWKHQHZWHUPVDW&KDPEHUV:RUNVmEHIRUHRU DQ RWKHUZLVH VXFFHVVRU FDQ VHW WKH LQLWLDO WHUPV LPPHGLDWHO\DIWHUFRPPHQFLQJRSHUDWLRQVl+RZHYHUWKLV XQLODWHUDOO\ZLWKRXWYLRODWLQJWKH$FWVLQFHSULRUWRWKH ODQJXDJHFDQQRWEHGLYRUFHGIURPWKHIDFWVRIWKH3HWHUVFDVH UHKLULQJRIKLVSUHGHFHVVRU VHPSOR\HHVZKLFKFRQVWLWXWH WKH PDMRULW\ RI KLV ZRUN IRUFH LQ DQ DSSURSULDWH XQLW  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

WKHUH LV QR GXW\ WR EDUJDLQ     7KH RQO\ LQVWDQFH LQ 7KXUVGD\ :HVWHUQ 3DSHU VHQW LWV HPSOR\HHV KRPH DQG ZKLFK WKH GXW\ WR EDUJDLQ PD\ SUHFHGH WKH IRUPDO LQIRUPHG WKHP WKDW LW PLJKW QRW EH DEOH WR FRYHU WKHLU UHKLULQJRIHPSOR\HHVLVZKHUHLWLVSHUIHFWO\FOHDUWKH SD\FKHFNV2QWKHIROORZLQJ0RQGD\sDQXDU\WKH RWKHUZLVHVXFFHVVRUSODQVWRUHWDLQDVXIILFLHQWQXPEHU +DPLOWRQ&RXQW\2KLR&RXUWRI&RPPRQ3OHDVDSSRLQWHG RI KLV SUHGHFHVVRU V HPSOR\HHV VR WKDW WKH XQLRQ V 3HWHUV WR PDQDJH :HVWHUQ 3DSHUjV DVVHWV  3HWHUV UHFDOOHG PDMRULW\VWDWXVZLOOFRQWLQXH :HVWHUQ3DSHUjVHPSOR\HHVWKHVDPHGD\DQGWROGWKHPWKDW KH ZRXOG GHOLYHU SD\FKHFNV IRU WKHLU SULRU ZRUN ,GDWFLWDWLRQVRPLWWHGHPSKDVLVDGGHG,Q6SLW]HU 6LJQLILFDQWO\KHDOVRWROGWKHPWKDWWKH8QLRQFRQWUDFWZRXOG ZHIRXQGWKDWWKHHPSOR\HUZDVDSHUIHFWO\FOHDUVXFFHVVRU EHmµQXOODQGYRLGGXULQJWKHUHFHLYHUVKLSjl3HWHUV)G EHFDXVHWKHZRUNIRUFHZDVKLUHGSULRUWRWKHDQQRXQFHPHQW DW   6RRQ DIWHU KH EHFDPH UHFHLYHU KH DGGUHVVHG WKH RIFKDQJHVLQZDJHVDQGEHQHILWVDQGVXFKPRGLILFDWLRQVKDG HPSOR\HHVDQGGHVFULEHGWKHEHQHILWVSDFNDJHKHZRXOGRIIHU QRWEHHQSDUWRIWKHLQLWLDOWHUPVRIUHKLULQJE\WKHVXFFHVVRU WRWKHPLIDQGZKHQKHSXUFKDVHG:HVWHUQjVDVVHWV,G ,GDW0RUHRYHUWKHVXFFHVVRUKDGDOVRWROGWKH HPSOR\HHVWKDWKHmµZDQWHGHYHU\PDQWRVWD\RQWKHMRE 83:ILOHGDVHULHVRIXQIDLUODERUSUDFWLFHFKDUJHVDJDLQVW DQGZRXOGFDUU\RQDVXVXDOjl,GDW 3HWHUV DOOHJLQJ WKDW KH KDG YLRODWHG † D  DQG  E\ XQLODWHUDOO\ VHWWLQJ WKH LQLWLDO WHUPV DQG FRQGLWLRQV RI ,QWKLVFDVH''(FRQFHGHVWKDWLWLVDVXFFHVVRUHPSOR\HU HPSOR\PHQW  7KH 1/5% FRQFOXGHG WKDW 3HWHUV ZDV D WR 'X3RQW DQG 'RZ EXW GHQLHV WKDW LW LV D SHUIHFWO\ FOHDU VXFFHVVRUWR:HVWHUQ3DSHUDQGWKDWKHYLRODWHGWKH$FWE\ VXFFHVVRU,QILQGLQJWRWKHFRQWUDU\WKH%RDUGUHDVRQHGDV UHIXVLQJWREDUJDLQZLWK83:7KH6L[WK&LUFXLWUHYHUVHGWKH IROORZV 1/5%jV GHFLVLRQ DQG KHOG WKDW 3HWHUV ZDV IUHH WR VHW WKH LQLWLDOWHUPVRIHPSOR\PHQW,QUHDFKLQJWKLVFRQFOXVLRQWKH >,@WLVFHUWDLQO\FOHDUWKDW''(SODQQHGDQGDQQRXQFHG &RXUWVWDWHGWKDW LWVLQWHQWWRUHWDLQWKHLQFXPEHQW'X3RQWXQLWHPSOR\HHV DW/RXLVYLOOHDQG&KDPEHU>V@:RUNV2Q1RYHPEHU 3HWHUVFOHDUO\LQIRUPHGWKHHPSOR\HHVWKDWKHGLGQRW ''(DQQRXQFHGWRWKH8QLRQVWKDWLWLQWHQGHGWR LQWHQGWRKRQRUWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQWRQ RIIHU HPSOR\PHQW WR DOO LQFXPEHQW HPSOR\HHV DW ERWK sDQXDU\   WKH ILUVW GD\ KH DVVXPHG FRQWURO RI SODQWVXQGHUWHUPVDQGFRQGLWLRQVWREHDQQRXQFHGRQ RSHUDWLRQV  7KH %RDUG IRFXVHG RQ WKH IDFW WKDW WKH 1RYHPEHU HPSOR\HHVKDGDUULYHGDWZRUNEHIRUH3HWHUVWROGWKHP WKDWKHZDVQRWJRLQJWRKRQRUWKHLUFROOHFWLYHEDUJDLQLQJ 2Q 1RYHPEHU  ''( QRWLILHG WKH 8QLRQV WKDW DJUHHPHQW ZLWK :HVWHUQ >WKH SUHGHFHVVRU HPSOR\HU@ DOWKRXJKLWGHFOLQHGWRKRQRUWKHLUFRQWUDFWVZLWK'X3RQW 7KH%RDUGFRPPHQWHGWKDW3HWHUVVKRXOGKDYHUHTXLUHG ''(ZRXOGPDLQWDLQWKHHPSOR\HHVj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

)DOO5LYHU86DW&DQWHHQ&RUSY1/5% FRQGLWLRQVRIHPSOR\PHQWRWKHUWKDQWKHDGGLWLRQRIWKH )G   WK &LU   +HUH ''( DV D VXFFHVVVKDULQJSODQ2QRUDERXWsDQXDU\''( VXFFHVVRUHPSOR\HUZDVXQGHUQRREOLJDWLRQWRKLUH'X3RQW WHQGHUHG XQFRQGLWLRQDO RIIHUV RI KLUH XQGHU WKH WHUPV DQG'RZHPSOR\HHVEXWRQFHLWGHFLGHGWKDWLW ZDQWHGDQ SUHYLRXVO\GLVFXVVHG H[SHULHQFHGZRUNIRUFHLWEHFDPHREOLJDWHGWRQHJRWLDWHZLWK WKRVHHPSOR\HHVj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IRULWVKROGLQJWKDW WR EHJLQQLQJ RSHUDWLRQV DW /RXLVYLOOH  $W &KDPEHUV :RUNV''(ZDLWHGXQWLOGD\VDIWHULWKDGIRUPDOO\ >7@KH HPSOR\HU PD\ VHW LQLWLDO WHUPV RI HPSOR\PHQW WHQGHUHGXQFRQGLWLRQDORIIHUVRIKLUHEHIRUHDQQRXQFLQJ ZLWKRXWILUVWFRQVXOWLQJWKHEDUJDLQLQJXQLWUHSUHVHQWDWLYH VLJQLILFDQWFKDQJHV%\WKDWGDWHDQXPEHURI&KDPEHU XQGHUWZRFLUFXPVWDQFHV7KHHPSOR\HUPD\VHWLQLWLDO >VLF@:RUNVHPSOR\HHVKDGDOUHDG\DFFHSWHG''(jVRIIHU WHUPV  LI LW KDV QRW E\ WDFLW LQIHUHQFH PLVOHG WKH RIHPSOR\PHQW HPSOR\HHVLQWREHOLHYLQJWKDWSULRUZRUNLQJFRQGLWLRQV ZLOO UHPDLQ VWDEOH RU  LI LW KDV DIILUPDWLYHO\ >,@WZDVSHUIHFWO\FOHDUQRODWHUWKDQ1RYHPEHU DQQRXQFHG LWV LQWHQWLRQ WR UHWDLQ WKH HPSOR\HHV XQGHU WKDW''(LQWHQGHGWRUHWDLQLWVSUHGHFHVVRUjVHPSOR\HHV QHZHPSOR\PHQWFRQGLWLRQVEHIRUHRULPPHGLDWHO\DIWHU DW ERWK /RXLVYLOOH DQG &KDPEHUV :RUNV  ,QGHHG WKH FRPPHQFLQJRSHUDWLRQV,QDQ\HYHQWLWZRXOGEHZLVH VXFFHVV RI WKH QHZ MRLQW YHQWXUH GHSHQGHG RQ WKH IRUDVXFFHVVRUHPSOR\HUWRPDNHLWVLQWHQWLRQVNQRZQ FRQWLQXLQJ HPSOR\PHQW RI WKLV ZRUN IRUFH  7KH LPPHGLDWHO\DQGDIILUPDWLYHO\ 5HVSRQGHQW KDG DQQRXQFHG LWV FOHDU LQWHQW WR KLUH WKH 'X3RQWXQLWHPSOR\HHVRQ1RYHPEHUZKLOHDWWKH 3HWHUV)GDWHPSKDVLVDGGHG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 EHIRUH  )XUWKHU WKHUH ZDV QRWKLQJ LQKHUHQW LQ WKH DQG6DPXHO3HWHUVZKRZDVWKHFRXUWDSSRLQWHGUHFHLYHURI DQQRXQFHPHQW RI VXFFHVV VKDULQJ E\ ''( RQ :HVWHUQ 3DSHU 3URGXFWV ,QF  83: KDG HQWHUHG LQWR D 1RYHPEHUDQGFRQYH\HGLQWKHRIIHUVRIKLUH FROOHFWLYHEDUJDLQLQJDJUHHPHQWZLWK:HVWHUQ3DSHUWKDWZDV RQsDQXDU\ZKLFKZRXOGGLPLQLVKWKHOLNHOLKRRGWKDW WR UHPDLQ LQ HIIHFW WKURXJK 1RYHPEHU    :HVWHUQ HPSOR\HHV ZRXOG DFFHSW ''(jV RIIHU RI HPSOR\PHQW 3DSHU ZDV H[SHULHQFLQJ ILQDQFLDO SUREOHPV KRZHYHU DQG 7R WKH FRQWUDU\ LI DQ\WKLQJ WKH DGGLWLRQ RI VXFFHVV DIWHULWVSULPDU\OHQGHUFDOOHGLQDORDQRQsDQXDU\D VKDULQJWKH RQO\ DQQRXQFHG FKDQJHZRXOG KDYH  'XSRQW'RZ 1RV 1RV 'XSRQW'RZ  (ODVWRPHUVY1/5% (ODVWRPHUVY1/5%

HQKDQFHGQRWGLPLQLVKHGWKHOLNHOLKRRGWKDWHPSOR\HHV PHPRWKDWm>D@VDOLNHO\mVXFFHVVRUlFRPSDQ\WKHYHQWXUH ZRXOGDFFHSWWKHRIIHUV7KHVXEVHTXHQWDQQRXQFHPHQW ZLOOVHWWKHLQLWLDOWHUPVDQGFRQGLWLRQVRIHPSOR\PHQWlLVQRW RIFKDQJHVDW&KDPEHUV:RUNVRQs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jVHPSOR\HHV ZLWKRXW LQGLFDWLQJ WKDW HPSOR\PHQW LV FRQGLWLRQHG RQ ''(UDLVHVVHYHUDOFKDOOHQJHVZHGHDOZLWKHDFKLQWXUQ DFFHSWDQFHRIQHZWHUPV )LUVW''(FODLPVWKDWLWGLGQRWKLUHWKH'X3RQWHPSOR\HHV RQVXEVWDQWLDOO\WKHVDPHWHUPVDQGFRQGLWLRQVEHFDXVHLWV 'X3RQW'RZ(ODVWRPHUV//&1/5%1R VXFFHVV VKDULQJ SODQ ZDV D QHZ FRQGLWLRQ RI HPSOR\PHQW IRRWQRWHVRPLWWHG :HUHMHFWWKLVDUJXPHQW7KHVXFFHVVVKDULQJSODQZKLFK FRQVLVWVRIDVLJQLQJERQXVDQGVXFFHVVLYHSHUIRUPDQFH 9LHZLQJWKHUHFRUGDVDZKROHZHILQGWKDWWKH1/5% V ERQXVHVZDVDKLULQJLQFHQWLYHGHVLJQHGWRLQGXFH'X3RQW IDFWXDOILQGLQJVDUHVXSSRUWHGE\VXEVWDQWLDOHYLGHQFHDQGWKDW HPSOR\HHV WR DFFHSW HPSOR\PHQW ZLWK ''(  7KXV WKH LWV OHJDO FRQFOXVLRQV DUH SHUPLVVLEOH XQGHU WKH 1/5$ DQG VXFFHVV VKDULQJ SODQ KHOSHG WR LQVXUH ''(j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jHPSOR\HHVWRHQVXUHWKDW FXWVWZRZD\VKRZHYHU,IWKHQHZHPSOR\HURIIHUVOHVVHURU ''(ZRXOGQRWORVHWKHVHH[SHULHQFHGHPSOR\HHVWRRWKHU LQFRQVLVWHQWWHUPVDQGLJQRUHVWKHXQLRQLWUXQVWKHULVNRI HPSOR\HUV7KHIRUPDWLRQDJUHHPHQWEHWZHHQ'X3RQWDQG ORVLQJWKHH[SHULHQFHGZRUNIRUFHWRRWKHUHPSOR\HUV7KXV 'RZH[SUHVVO\FRQWHPSODWHGWKDWWKH\ZRXOGXVHmWKHLUEHVW DVWKH6XSUHPH&RXUWREVHUYHGLQ)DOO5LYHU HIIRUWVl WR KLUH 'X3RQW V HODVWRPHU HPSOR\HHV XQGHU VXEVWDQWLDOO\ WKH VDPH WHUPV RI HPSOR\PHQW  7KH >7@RDVXEVWDQWLDOH[WHQWWKHDSSOLFDELOLW\RI%XUQVUHVWV 1RYHPEHUDQQRXQFHPHQWDQGsDQXDU\RIIHUV LQ WKH KDQGV RI WKH  VXFFHVVRU  ,I WKH QHZ HPSOR\HU PDLQWDLQHGWKRVHWHUPVDQGFRQGLWLRQVRIHPSOR\PHQW,Q PDNHV D FRQVFLRXV GHFLVLRQ WR PDLQWDLQ JHQHUDOO\ WKH IDFWDVWKH%RDUGIRXQGRWKHUWKDQWKHVXFFHVVVKDULQJSODQ VDPH EXVLQHVV DQG WR KLUH D PDMRULW\ RI LWV HPSOR\HHV QRQHZWHUPVRUFRQGLWLRQVZHUHDQQRXQFHGXQWLOZHOODIWHU IURPWKHSUHGHFHVVRUWKHQWKHEDUJDLQLQJREOLJDWLRQRI XQFRQGLWLRQDOHPSOR\PHQWRIIHUVKDGEHHQPDGH''(GLG † D  LV DFWLYDWHG  7KLV PDNHV VHQVH ZKHQ RQH QRWDWWHPSWWRVXEVWDQWLDOO\DOWHUWKHWHUPVDQGFRQGLWLRQVRI FRQVLGHUVWKDWWKHHPSOR\HULQWHQGVWRWDNHDGYDQWDJHRI HPSOR\PHQWXQWLOLWKDGVHFXUHGWKHVDPHH[SHULHQFHGZRUN WKHWUDLQHGZRUNIRUFHRILWVSUHGHFHVVRU IRUFH  ''(jV VLQJOH VWDWHPHQW LQ WKH 1RYHPEHU